I have sold all my $CSL holding in RL this morning prior to the investor call. And the call and Q&A, in particular, confirmed my decision - the answers conveyed a sense of more headwinds and downsides, than upsides (beyond those already fully banked, like improvements in Behring %GM and lower capex).

Don't get me wrong, $CSL is a phenomenal company with amazing capabilities in its core therapy areas. However, the numbers are starting to diverge from the projections in more of my scenarios as each year goes by. Today, with the guidance for FY25, it was "strike 3".

While a key culprit is Vifor, there is more to my loss of conviction than that. But having Vifor as flat for the foreseeable future given the competitive landscape and lack of visibility of growth, is the straw that breaks .... If $CSL were just Behring and Sequirus, I'd probably still be a hold!

First, the strong earnings growth in FY24 was driven by stellar performance in Behring. No question about it. But in order to make up for Vifor and the tough current environment in Sequirus, they are pulling a lot of levers: 1) initiatives to recover %GM in Behring, 2) the benefit of a period of low capex and 3) strong Opex discipline/cost out.

But when I look at the individual products and the narrative around them, I can't see the engines driving the sustained mid-to-high teens earning growth that my valuation requires for many years to come. On top of that, I worry about the complete lack of transparency around product growth (or decline?) in the Vifor portfolio.

I'm not sure what the analysts are going to show in their updates, but FY25 looks soft to me. On its own, I would look through one year and hold for the longer term. I just don't have visibility on where the growth drivers are coming from, beyond another 2-3 years of incremental %GM improvements with Behring. But that aint enough.

I've been reasonably fortunate in my timing of $CSL share acquisition, so will crytallise a tidy profit. But with a number of recent buys under my belt, I want some more cash in the portfolio again to buy where I see better medium term returns.

I wrote earlier today that Vifor probably has to play out over a longer timeframe, but management has not helped me by showing where the Vifor value drivers are. Some will say it took a long time for Sequirus to deliver value, and that's true. This is a long cycle game. But I just don't have conviction around the numbers I need to justify a P/E of 36.

Of course, I could be wrong. Perhaps garadacimab gets approved in a few weeks, and becomes the next blockbuster. Maybe more of the sa-mRNA vaccines take off. Maybe we get a bird flu epidemic or pandemic, and then its all hands to the pump. But I'd rather deal with these items of newsflow and reconsider my decision from the sidelines.

Disc: Not Held in RL of SM

Six months ago after the result in Feb I wrote a review "losing my religion", still losing it. poor result. i will write a much longer tome later. but Behring is good, rest is not so good. CSL is still a very strong company but carrying a couple of milestones i think at this stage, $250 is where i would add. halved my position. caveat i am still working through numbers, CSL is not as easy as it once was. imo.

Great summary @mikebrisy I sold a while ago too IRL because the trend for 5+ years now hasn't been good. All the key metrics I follow like ROC, ROE, EPS growth and net profit margins are in steady decline as listed in the table below. Debt to equity is also fairly high for such a large business at 77%. And yet it is still trading on 40 times PE.

That multiple was understandable 5+ years ago when all those metrics were high and growing. It doesn't make as much sense when they are consistently trending down and blaming covid disruption is getting a bit hard to swallow now.

It's a great business and a great Aussie success story. I don't expect the topline to turn negative any time soon. But I'm not prepared to hold a business this big, on that multiple, without double digit growth most years. It could easily come back to 20 or 25 times PE over the next few years.

I appreciate this view wont be popular with some people, who have owned it for many years and made a fortune or who are getting more in dividends than they paid for the shares!

@Karmast Exactly!

I took a step back today, and realised that over the last 6 half-yearly results calls I was in danger of becoming a frog sitting in a pan of water slowing warming up.

Too many times I’ve said, OK, good not great,…it will get better soon. Thesis intact. One more year. Fantastic company look at the long term trends.

Time to hop out, cool off, and see what the water is really doing.